-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DxORvnj5icbCPD+Dg4/nToCo0T1+I2BQsQTY5O3XIH934kXzTmvbFw4Bc/MuLzvy 0aJlBaSxwvRw1gVN+2lFOA== 0000009626-02-000042.txt : 20021002 0000009626-02-000042.hdr.sgml : 20021002 20021002162716 ACCESSION NUMBER: 0000009626-02-000042 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK OF NEW YORK CO INC CENTRAL INDEX KEY: 0000009626 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 132614959 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06152 FILM NUMBER: 02779947 BUSINESS ADDRESS: STREET 1: ONE WALL ST 10TH FL CITY: NEW YORK STATE: NY ZIP: 10286 BUSINESS PHONE: 212-495-1784 MAIL ADDRESS: STREET 1: ONE WALL STREET 31ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10286 8-K 1 r8k1002.txt 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8 - K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 2, 2002 THE BANK OF NEW YORK COMPANY, INC. ---------------------------------- (exact name of registrant as specified in its charter) NEW YORK -------- (State or other jurisdiction of incorporation) 001-06152 13-2614959 --------- ---------- (Commission file number) (I.R.S. employer identification number) One Wall Street, New York, NY 10286 ----------------------------- ----- (Address of principal executive offices) (Zip code) 212-495-1784 ------------ (Registrant's telephone number, including area code) 2 ITEM 5. Other Events ------------ On October 2, 2002, The Bank of New York Company, Inc. issued a press release announcing special charges for loans and securities valuation adjustments for the third quarter of 2002. Exhibit 99 is a copy of such press release and is incorporated herein by reference. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits ------------------------------------------------------------------ (c) Exhibit Description ------- ----------- 99 Announcement of Special Charges for loans and securities valuation adjustments contained in the press release dated October 2, 2002, of The Bank of New York Company, Inc. 3 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: October 2, 2002 THE BANK OF NEW YORK COMPANY, INC. (Registrant) By: /s/ Thomas J. Mastro ------------------------- Name: Thomas J. Mastro Title: Comptroller 4 EXHIBIT INDEX ------------- Exhibit No. Description - ----------- ----------- 99 Announcement of special charges for loans and securities valuation adjustments for the third quarter of 2002 contained in the press release dated October 2, 2002, of The Bank of New York Company, Inc. EX-99 3 ex99.txt EX-99 1 EXHIBIT 99 The Bank of New York Company, Inc. NEWS - ----------------------------------------------------------------------------- One Wall Street, New York, NY 10286 ----------------------------------- Contact: PUBLIC AND INVESTOR RELATIONS IMMEDIATELY - ----------- Media: Investors: - ----- --------- Robert T. Grieves, SVP John M. Roy, MD (212) 635-1590 (212) 635-8005 Cary J. Giacalone, VP Gregg A. Scheuing, VP (212) 635-1590 (212) 635-1578 THE BANK OF NEW YORK COMPANY, INC. ANNOUNCES THIRD QUARTER CHARGES FOR LOANS AND SECURITIES VALUATION ADJUSTMENTS NEW YORK, N.Y., October 2, 2002 - The Bank of New York, Company, Inc. (NYSE: BK) announced today that it is taking two actions in light of current market conditions. First, the Company will increase its quarterly loan loss provision above a core provision of $40 million by $185 million to a total of $225 million, principally to recognize deterioration in a limited number of borrowers in the telecommunications segment of its loan portfolio. Second, in view of the sharp and continuing decline in equity market values, the Company will take a $210 million valuation adjustment against its equity investment portfolios, largely reflecting what is deemed to be other-than- temporary impairment of several holdings, principally in its bank stock portfolio. The combined charge of $395 million pre-tax, or $260 million after tax, will reduce fully diluted per share earnings by 36 cents. Excluding these charges, the Company expects to earn 47 cents per fully diluted share for the third quarter, compared to the First Call consensus 2 estimate of 50 cents per share. Securities servicing revenues will show slight sequential quarter growth, but core operating results were negatively impacted in the quarter by extremely slow capital markets activity commencing in the middle of the quarter. This market environment contributed to weak results in foreign exchange and other trading activities. The impact of these charges on capital was reduced by the unrealized gain on the Company's available-for-sale fixed income portfolio, which increased by $85 million to $245 million. The Company expects to report quarter-end capital ratios within its targeted ranges. Of the $225 million increase to the loan loss reserve for the quarter, $120 million will be used for charge-offs associated with the creation of a disposition portfolio for five impaired telecommunications credits, including one large exposure to an internet backbone company; $40 million will cover the charge-offs of other credits; and $65 million will be added to the allowance for loan losses. The Company recorded a provision for loan losses and charge-offs of $35 million in both the first and second quarters of 2002. Also in the quarter, the Company expects non-performing assets to increase by approximately $240 million, or 76%, primarily reflecting the addition of a large aggregate exposure to a cable operator. This exposure, representing credit facilities to six different, but affiliated borrowing groups, is secured and the Company believes that prospects for repayment continue to be strong. Thomas A. Renyi, the Company's Chairman and CEO, stated, "The third quarter was a very challenging period, worsening substantially after a reasonably good July. While we decisively moved to exit our emerging telecom portfolio in the fourth quarter of last year, the weakness in the current operating environment has challenged other telecom companies. As a result, we felt it prudent to move five credits into our loan disposition program and to take an additional provision. We have made steady progress in reducing 3 our exposure to higher risk credits and will continue our intensive efforts to do so in the telecom segment as well as throughout the loan portfolio. "With respect to the investment activities, our bank stock portfolio has historically performed very well. Notwithstanding that, last year we made a decision to extract capital from our equity investing activity, including sponsor and direct investing. The bank portfolio has long been focused on processors and capital markets sensitive companies, whose stock prices deteriorated sharply in the quarter. With this charge we have greater flexibility to reduce the risk in this portfolio. We reiterate our specific objective to redeploy capital from this activity to our core businesses." Mr. Renyi continued, "These results are not reflective of the earnings potential of our business model. We continue to transform our business mix through a difficult environment, improving our risk profile and executing our long-term strategy. We currently anticipate fourth quarter EPS of 47-49 cents, assuming a continuation of the current environment, the maintenance of a $40 million loan loss provision and fixed-income derived securities gains of about $10 million." The Company has provided additional details on its loan exposures and outstandings, as well as on its investment portfolios, in the Exhibits to this release. The Company will hold a live conference call today, Wednesday, October 2, 2002, at 5:15 p.m. ET, featuring Thomas A. Renyi, chairman and chief executive officer, Gerald L. Hassell, president, and Bruce W. Van Saun, chief financial officer. The call can be accessed domestically at (888)989-6421 and internationally at (212)287-1662. It is recommended that participants call in 5 minutes prior to the start time in order to register for the call. The access code for the live call is "The Bank of New York." Recorded replays of the call will be available approximately 1 hour after the call is completed and will be available through 5:00 p.m. ET on 4 Wednesday, October 9, 2002. The replay can be accessed domestically at (800)944-1822 and internationally at (402)220-9101. In addition, a printable version of this release with the exhibits is also available at www.bankofny.com/octpr. The Company plans to report its third quarter earnings on Wednesday, October 16th. *************************** FORWARD LOOKING STATEMENTS All statements in this press release other than statements of historical fact are forward looking statements including, among other things, projections with respect to revenue and earnings and the Company's plans and objectives and as such are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward looking statements. These include lower than expected performance or higher than expected costs in connection with acquisitions and integration of acquired businesses, the level of capital market activity, changes in customer credit quality, the effects of capital reallocation, portfolio performance, ultimate differences from management projections or market forecasts, the actions that management could take in response to these changes and other factors described under the heading "Forward Looking Statements" in the Company's 2001 Form 10-K and Second Quarter 2002 Form 10-Q which has been filed with the SEC and is available at the SEC's website (www.sec.gov). Forward looking statements speak only as of the date they are made. The Company will not update forward looking statements to reflect factual assumptions, circumstances or events which have changed after a forward looking statement was made. 5 Exhibit I Accelerated Loan Disposition Program (dollars in millions)
Number of Total Total Exposure/ Outstanding/ Credits Exposure Outstanding Borrower Borrower --------- -------- ----------- --------- ------------ Fourth Quarter 2001 Accelerated Loan Disposition Program: Original - Prior to Charge-Off 25 $758 $488 $30 $19 Subsequent to Charge-Off 523 253 21 10 Remaining at 6/30/02 10 63 53 6 5 Third Quarter 2002 Additions to Program: Prior to Charge-Off 5 160 158 32 32 Subsequent to Charge-Off 40 38 8 8 Other Third Quarter Activity: Net Reductions 4 (18) (18) - - Remaining at 9/30/02 11 85 73 8 7
6 Exhibit II Media and Telecom Portfolio (dollars in millions)
Broadcasting Entertainment Cable All Total & Publishing & Programming TV Other Media Telecom Total ------------ ------------- ----- ----- ------ ------- ------ Unfunded Commitments(1)(2) 12/31/01 $1,342 $1,491 $895 $304 $4,032 $1,354 $ 5,386 9/30/02(5) 1,148 1,074 899 227 3,348 843 4,191 ------- ------- ---- ----- ------- ------- -------- Change $ (194) $ (417) $ 4 $(77) $ (684) $ (511) $(1,195) ======= ======= ==== ===== ======= ======= ======== Loans Outstanding(1) 12/31/01 $1,027 $ 909 $851 $213 $3,000 $ 793 $3,793 9/30/02(5) 1,027 788 875 231 2,921 733 3,654 ------ ------- ---- ---- ------- ------- ------- Change $ - $ (121) $ 24 $ 18 $ (79) $ (60) $ (139) ====== ======= ==== ==== ======= ======= ======= Total Exposure(1)(2) 12/31/01 $2,369 $2,400 $1,746 $517 $7,032 $2,147 $ 9,179 9/30/02(5) 2,175 1,862 1,774 458 6,269 1,576 7,845 ------- ------- ------ ----- ------- ------- -------- Change $ (194) $ (538) $ 28 $(59) $ (763) $ (571) $(1,334) ======= ======= ====== ===== ======= ======= ======== # of Borrowers 73 33 24 25 155 29 184 % Investment Grade(3) 64% 67% 43% 28% 56% 53% 57% % Secured(4) 40% 24% 57% 68% 42% 47% 43% (1) Excludes assets held for sale. (2) Unfunded commitments include letters of credit. (3) Investment grade commitments are those where the borrower has a Moody's long-term rating of Baa3 or better and/or a Standard & Poor's long-term rating of BBB- or better, or if unrated, has been assigned an equivalent rating using the Company's internal risk rating. (4) Secured is defined as those credit facilities secured by the borrower's assets and/or stock of its subsidiaries. 87% of the total media and telecom non-investment grade exposures are secured. (5) Estimate. Final figures are subject to adjustments.
7 Exhibit III Further Detail on Telecommunications Portfolio (dollars in millions)
Long Wireline Distance Towers Wireless Total -------- -------- ------ -------- ----- Unfunded Commitments(1)(2) 12/31/01 $ 577 $ 119 $108 $ 550 $1,354 9/30/02(5) 430 9 84 320 843 ------ ------ ----- ------ ------- Change $(147) $(110) $(24) $(230) $ (511) ====== ====== ===== ====== ======= Loans Outstanding(1) 12/31/01 $ 297 $ 127 $115 $ 254 $ 793 9/30/02(5) 396 27 133 178 733 ----- ------ ---- ------ ------- Change $ 99 $(100) $ 18 $ (76) $ (60) ===== ====== ==== ====== ======= Total Exposure(1)(2) 12/31/01 $ 874 $ 246 $223 $ 804 $2,147 9/30/02(5) 826 36 217 498 1,576 ------ ------ ----- ------ ------- Change $ (48) $(210) $ (6) $(306) $ (571) ====== ====== ===== ====== ======= # of Borrowers 11 3 5 10 29 % Investment Grade(3) 63% 0% 0% 64% 53% % Secured(4) 37% 100% 100% 36% 47% (1) Excludes assets held for sale. (2) Unfunded commitments include letters of credit. (3) Investment grade commitments are those where the borrower has a Moody's long-term rating of Baa3 or better and/or a Standard & Poor's long-term rating of BBB- or better, or if unrated, has been assigned an equivalent rating using the Company's internal risk rating. (4) Secured is defined as those credit facilities secured by the borrower's assets and/or stock of its subsidiaries. 100% of the telecom non-investment grade exposures are secured. (5) Estimate. Final figures are subject to adjustments.
8 Exhibit IV Overall Loan Portfolio (dollars in billions)
Unfunded Commitments(1)(2) Loans Outstanding(1)(3) --------------------------- ----------------------------- 12/31/01 9/30/02(4) Change 12/31/01 9/30/02(4) Change -------- --------- ------ -------- ---------- ------ Retail/Private Banking $ 1.4 $ 1.4 $ 0.0 $ 5.3 $ 5.2 $(0.1) Large-ticket Leasing 0.1 0.1 0.0 5.0 5.3 0.3 Commercial Real Estate 1.2 0.8 (0.4) 2.4 2.5 0.1 Financial Services Companies 21.9 22.2 0.3 9.6 9.4 (0.2) Media & Telecommunications 5.5 4.2 (1.3) 4.1 3.7 (0.4) Other Non-Financial Companies 25.2 22.8 (2.4) 9.3 7.9 (1.4) ----- ----- ------ ----- ----- ------ Total $55.3 $51.5 $(3.8) $35.7 $34.0 $(1.7) ===== ===== ====== ===== ===== ====== (1) Includes assets held for sale. (2) Unfunded commitments include letters of credit. (3) Excludes acceptances due from customers. (4) Estimate. Final figures are subject to adjustments.
9 Exhibit V Investment Portfolio (dollars in millions)
Preliminary ----------------------------------------------------------------- Period Ending 9/30/02 Unrealized Number 6/30/02 9/30/02 Valuation Gain/(Loss) of Holdings Fair Value Fair Value Adjustments 6/30/02 9/30/02 ----------- ---------- ---------- ----------- ------------------ Equity Investments Bank equity portfolio(1) 11 $ 824 $ 668 $ 165 $(3) $ 11 Sponsor and direct equity portfolio 394 356 326 45 - - --- ------ ----- ----- ---- ---- Total equities 405 $1,180 $ 994 $ 210 $(3) $ 11 === ====== ===== ===== ==== ==== Fixed income investments Available-for-sale $13,627 $15,300 $ - $160 $245 Held-to-maturity 1,198 1,170 - (3) (5) ------- ------- ----- ---- ---- Total fixed income $14,825 $16,470 $ - $157 $240 Investments ======= ======= ===== ==== ==== Percent 6/30/02 9/30/02 Change ------- ------- ------- S&P 500 Index 989.82 815.28 (18)% BKX Bank Index 829.62 697.09 (16)% (1) Bank equity portfolio historical return on average economic capital from 1995 is 21% including third quarter 2002 writedown.
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